Leighton: bagman’s inside job

David Savage named his new construction company after his Tasmanian retreat, known as Stone House. Photo: Scott Gelston

AFR Fairfax Exclusive Nick McKenzie and Richard Baker

Two top Leighton Holdings executives secretly created a rival company with a suspected corrupt “bagman” while they were meant to be working for the construction group.

Confidential company emails reveal that David Savage covertly launched “Project T” under the cover of his job as Leighton’s top international executive in late 2010.

Project T sought to lure several Leighton senior figures, including the chairman of its Dubai-based joint venture Habtoor Leighton Group, Riad al Sadik, and a suspected corrupt Leighton global consultant Packianathan Srikumar, to a private firm operating in the same market as Leighton and which could conceivably compete with it to win work.

The role of Mr Savage and others in Project T may break Australian laws that require senior company officers to work in the best interests of Leighton and its shareholders while employed by the Australian firm.

Project T formed on Leighton’s internal email

Project T was formed and discussed on Leighton’s internal email system, on company time and involved other top Leighton staff, including then executive Eric Wardle.

It appears Mr Savage wanted his new venture to win work on resource projects and offshore, shallow water projects – the same type of work he had been helping Leighton win.

David Savage was Leighton’s top international executive when he created a rival company in late 2010.

At the time Mr Savage launched Project T, he and longtime Leighton International consultant Mr Srikumar were named in internal Leighton memos as being allegedly involved in serious corruption and bribery.

Greens Deputy Leader Adam Bandt called for a federal funding boycott of any projects featuring Leighton or its subsidiaries until a parliamentary inquiry into the affair is completed.

As The Australian Financial Review revealed on Thursday, a Leighton file reveals Mr Savage allegedly disclosed to acting chief executive David Stewart on November 23, 2010, that Leighton’s international business paid a $40 million bribe to win a $750 million project in Iraq.

In November 2010, an internal investigation was probing Mr ­Srikumar’s suspected role in kickbacks and fraud on a Leighton project in Indonesia.

Project T led to formation of Stonehouse Constructions

Mr Savage was secretly working on Project T in the last few months of 2010 and in early 2011.

A confidential Project T proposal states that Mr Savage envisaged Mr Srikumar providing $US2 million capital along with “direct entrepreneurial access to clients” in the oil and gas industries.

Mr Sadik was expected to contribute $US2 million and win work “through his connections in general and particularly in the Middle East”.

These were the same connections Mr Savage spruiked in 2007, when, as head of Leighton International, he convinced the Australian company to pay Mr Sadik $377 million to buy into his firm Al Habtoor.

Investors now view the merger as disastrous due to Leighton Habtoor’s poor performance.

Malaysian company documents reveal Project T led to the formation of Malaysian firm Stonehouse Constructions, which was named after a ­holiday house Mr Savage owns in ­Tasmania. Mr Savage was named director of Stonehouse on March 31, the same day he left Leighton.

Mr Srikumar and a representative of Mr Sadik were appointed shortly afterwards and are understood to have invested several million dollars each.

Another director is Malaysian businessman Asgari Stephens, a former chairman of Leighton International’s ethics committee.

Stonehouse used Leighton’s track record in Malaysian tender

On April 14, two weeks after Mr Savage left Leighton and took over Stonehouse, Leighton reported an 11 per cent write-down of the book value of its stake in Habtoor Leighton.

Files held in Leighton’s Hong Kong office reveal Stonehouse used Leighton’s track record to qualify to tender for a project in Malaysia.